Opinion of the European Central Bank of 6 October 2017 on limitations to cash payments (CON/2017/40)
Date: 2017-10-06
Institutions: European Central Bank
Subjects: Cyprus, fight against crime, money, money laundering, national law, payment

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 6 October 2017  

on limitations to cash payments  

(CON/2017/40) 

Introduction and legal basis 

On 29 August 2017, the European Central Bank (ECB) received a request from the Cypriot Minister for 

Finance  for  an  opinion  on  draft  provisions  (hereinafter  the  ‘draft  provisions’)  contained  in  a  draft  law 

amending the Law for the Prevention and Suppression of Money Laundering Activities Laws of 2007 to 

2016 (hereinafter the ‘draft law’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the second indent of Article 2(1) of Council Decision 98/415/EC1, 

as the draft provisions relate to means of payment. In accordance with the first sentence of Article 17.5 of 

the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.

Purpose of the draft law and the draft provisions

1.1.  As stated in the explanatory note, the main aim of the draft law is to harmonise Cypriot legislation
with Directive (EU) 2015/849 of the European Parliament and of the Council2. More specifically, the 

purpose of the draft provisions is to transpose point (e) of Article 2(1)(3) of Directive (EU) 2015/849 

into  Cypriot law. Pursuant to point (e)  of Article 2(1)(3), natural  or  legal  persons (‘other  persons’) 

trading in goods in the exercise of their professional activities to the extent that payments are made 

or received in cash in an amount of EUR 10 000 or more, whether the transaction is carried out in a 

single  operation  or  in  several  operations  which  appear  to  be  linked,  are  deemed  to  be  ‘obliged 

entities’.  

1.2.  The  draft  provisions  prohibit  persons  trading  in  goods,  in  the  course  of  their  business  activities, 

from receiving in cash an amount equal to or greater than EUR 10 000, regardless of whether the 

transaction is carried out in a single operation or in several operations which appear to be linked. 

The  draft  provisions  further  provide  that  the  infringement  of  the  prohibition  constitutes  a  criminal 

offence  for  the  person  trading  in  goods  that  is  punishable  with  a  fine  not  exceeding  10  %  of  the 

amount received in cash.  

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Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use 
of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  amending  Regulation  (EU)  No 
648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing  Directive  2005/60/EC  of  the  European 
Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).  

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1.3.  As  stated  in  the  explanatory  note,  the  Cypriot  authorities  have  examined  policy  options  to  satisfy 

point (e) of Article 2(1)(3)  of Directive (EU) 2015/849, with a view to achieving this in an effective 

and  efficient  way,  with  as  little  cost  as  possible  to  businesses  and  society.  The  authorities  have 

examined  the  option  of  establishing  customer  identification  and  due  diligence  procedures  to  be 

carried out by ‘other persons’ trading in goods, not already covered by the legislation in force. Such 

a policy option would necessitate the establishment of a supervisory authority empowered with the 

responsibility  to  monitor  compliance.  The  other  policy  option  examined  was  to  curtail  the  use  of 

cash  payments  to  an  amount  of  less  than  EUR  10.000  per  transaction  involving  the  trading  of 

goods.  As  stated  in  the  explanatory  note  the  second  option  was  deemed  appropriate  by  the 

authorities,  as  it  follows  the  threshold  and  scope  of  Directive  (EU)  2015/849  in  so  far  as  persons 

trading in goods are impacted. Additionally, it seemed to the consulting authorities to be the most 

effective  way  to  mitigate  money  laundering  and  terrorist  financing  risks  in  relation  to  cash 

transactions,  relying  on 
the  European  Commission’s  Supranational  Risk 
Assessment  Report  on  Money  Laundering  and  Terrorist  Financing  of  26  June  20173.  Moreover, 

the  analysis  of 

such  an  approach  seemed  to  the  authorities  to  be  the  most  cost  effective  option,  as  it  avoids 

significant  administrative  burden  to  general  trading  businesses  and  the  authorities,  whilst  not 

imposing  any  additional  requirements  or  undue  burden  on  the  Central  Bank  of  Cyprus  in  its 

capacity  as  a  euro  currency  issuer.  Finally,  the  payment  systems’  infrastructure  in  Cyprus  was 

considered to be well developed, offering a wide range of payment channels and instruments which 

may be used by traders and businesses in general as an alternative to cash.  

1.4.  As noted in the explanatory note it seems that variants of the approach providing for limitation of 

cash payments have already been pursued by other Member States4.  

2. 

General observations  

2.1.  This  opinion  does  not  address  whether  the  draft  provisions  effectively  transpose  Directive  (EU) 

2015/849  into  Cypriot  law.  The  focus  of  this  opinion  is  on  the  limitation  of  cash  payments  in 

relation to the legal tender status of euro notes and coins. 

2.2.  The  Commission’s  Recommendation  on  the  scope  and  effects  of  legal  tender  of  euro  banknotes 
and  coins5  (hereinafter  the  ‘Commission  Recommendation’)  states  that  the  acceptance  of 

payments  in  cash  should  be  the  rule,  but  acknowledges  that  cash  may  be  refused  for  reasons 

related to the ‘good faith  principle’,  without this constituting  a  breach  of  the legal tender status of 

cash. Neither Union law nor the Commission Recommendation explicitly addresses whether, nor to 

what extent, it may be permissible to introduce a more general limitation to the obligation to accept 

euro cash payments. Therefore, Union law must be interpreted in order to ascertain the conditions 

that  a  limitation  on  payments  in  euro  notes  and  coins  should  fulfil,  including  the  conditions  that 

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SWD/2017/0241 final, available on the Commission’s website at www.ec.europa.eu. 

Including eight euro area Member States: Belgium, Greece, Spain, France, Italy, Latvia, Slovenia and Slovakia. 
Commission  Recommendation  of  22  March  2010  on  the  scope  and  effects  of  legal  tender  of  euro  banknotes  and 
coins (OJ L 83, 30.3.2010, p. 70) 

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should be fulfilled to comply with the legal tender status of euro banknotes and coins when general 
limitations to the obligation to accept cash payments are introduced6. 

2.3.  Recital  19  of  Council  Regulation  (EC)  No  974/987,  which  states  that  ‘limitations  on  payments  in 

notes  and  coins,  established  by  Member  States  for  public  reasons,  are  not  incompatible  with  the 

status  of  legal  tender  of  euro  banknotes  and  coins,  provided  that  other  lawful  means  for  the 

settlement  of  monetary  debts  are  available’,  should  be  taken  into  account.  Such  other  lawful 

means, uniformly acceptable for  use  within  euro  area, should  be  readily  accessible to  all citizens 

and economic agents, resident or non-resident, in the respective Member State.  

2.4. 

In  this  respect,  the  ECB  notes  that  Directive  2014/92/EU  of  the  European  Parliament  and  of  the 
Council8  has  made  it  easier  for  Union  consumers  to  obtain  payment  accounts  and  related 

electronic  payment  services  as  alternatives  to  cash.  In  the  Republic  of  Cyprus,  Directive 

2014/92/EU  was  transposed  by  the  Comparability  of  Fees,  Payment  Account  Switching  and 
Access to Payment Accounts Law of 20179, which establishes the legal framework for the creation 

of the conditions for making a minimum set of banking services accessible to all consumers. 

2.5.  The  ECB  also  acknowledges  that  the  objective  of  combating  money  laundering  may,  in  general, 

qualify  as  ‘public  reasons’  justifying  the  establishment  of  limitations  on  cash  payments,  but  any 
limitation should not otherwise affect in principle the legal tender status of euro banknotes10.  

2.6.  Limitations  on  cash  payments  should,  therefore,  be  effective  and  proportionate  to  the  objectives 

pursued  and  should  not  go  beyond  what  is  necessary  to  achieve  such  objectives.  Any  negative 

impact  of  the  proposed  limitations  should  therefore  be  carefully  weighed  against  the  anticipated 

public benefits. When considering whether a limitation is proportionate, the adverse impact of the 

limitation in question should always be considered, as well as whether alternative measures could 
be adopted that would fulfil the relevant objective and have a less adverse impact11.   

2.7.  Furthermore, it should be borne in mind that the ability to pay in cash remains particularly important 

for  certain  groups  in  society  that,  for  various  legitimate  reasons,  prefer  to  use  cash  rather  than 

other payment instruments. Cash is generally also appreciated as a payment instrument because it 

is widely accepted, fast, secure and facilitates control over the payer’s spending. Moreover, it is a 

means  of  payment  that  allows  citizens  or  economic  agents  in  general  to  instantly  settle  a 

transaction in central bank money and at face value, without the legal possibility to impose a fee for 

the use of this means of payment. Additionally, cash payments facilitate the inclusion of the entire 
population in the economy by allowing it to settle any kind of financial transaction in this way12. 

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See, for example, paragraph 2.3 of Opinion CON/2017/27, paragraph 3.1 of Opinion CON/2017/20 and paragraph 
2.1 of Opinion CON/2017/18. All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 

Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (OJ L 139, 11.5.1998, p. 1). 
Directive 2014/92/EU of  the  European  Parliament and of the Council of 23  July  2014 on  the comparability  of  fees 
related to payment accounts, payment account switching and access to payment accounts with basic features (OJ L 
257, 28.8.2014, p. 214). 
Law of 64(I)/2017. 

See, for example, paragraph 2.4 of Opinion CON/2017/18. 
See, for example, paragraph 2.7 of Opinion CON/2017/27, paragraph 3.3 of Opinion CON/2017/20, paragraph 2.5 of 
Opinion CON/2017/18, paragraphs 2.6 and 2.7 of Opinion CON/2017/8, paragraph 2.3 of Opinion CON/2014/37 and 
paragraph 2.3 of Opinion CON/2014/4. 
See, for example, paragraph 2.8 of Opinion CON/2017/27, paragraph 3.4 of Opinion CON/2017/20 and paragraph 
2.6 of Opinion CON/2017/18. 

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2.8.  The  ECB  considers  that  other  lawful  means  for  the  settlement  of  monetary  debts  are  generally 

available  to  consumers  in  the  Republic  of  Cyprus  for  the  purchase  of  goods,  also  above  the 

foreseen threshold of EUR 10 000, with similar benefits as cash. Taking also into consideration the 

above  general  observations,  the  limitations  on  cash  payments  in  the  draft  provisions  may  be 

deemed  proportionate  to  the  objectives  pursued  and  do  not  go  beyond  what  is  necessary  to 

achieve such objectives. 

3. 

Specific observation 

3.1.  The  ECB  takes  particular  note  of  the  approach  adopted  in  the  draft  provisions,  whereby  the 

prohibition on the receipt of cash in an amount equal to or greater than EUR 10 000 is limited to 

transactions whereby the cash recipient is trading in goods in the course of business activities. The 

ECB  understands  that  it  is  not  therefore  proposed  to  prohibit  the  receipt  of  EUR  10  000  or  more 

where  the  cash  recipient  is  not  a  person  trading  in  goods  in  the  course  of  his/her  business.  The 

ECB  welcomes  the  approach  taken  by  the  Cypriot  authorities  not  to  establish  any  restrictions  on 

cash payments between private users or consumers.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 6 October 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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